14/10/2008 - 10:49

First home buyer lift to boost activity

14/10/2008 - 10:49

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Australia's largest building association says measures announced by the federal government to boost the economy will support the housing market and increase activity.

First home buyer lift to boost activity

Australia's largest building association says measures announced by the federal government to boost the economy will support the housing market and increase activity.

The government today said it will invest about $1.5 billion in the housing market over 2008/09 and 2009/10, as part of a $10.4 billion package to help Australia counter the global economic crisis.

The Housing Industry Association (HIA) said a doubling in the first home owners grant, announced as part of the plan, would stimulate construction activity.

The payment under the first home buyers scheme will be doubled from $7,000 to $14,000 and first home buyers who buy newly-constructed home will receive an extra $14,000 taking their total grant to $21,000.

HIA managing director Ron Silberberg said the plan would boost new home building by 15,000.

"It is appropriate that the measure targets assistance for new housing to meet underlying and effective demand," Dr Silberberg said.

The building rate of new houses has been falling and has widened the gap between the supply and current demand for dwellings, the HIA said.

The announcement by the federal government would lift the subdued activity in the residential building sector and in the Australian economy, Dr Silberberg said.

"This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector particularly in the building manufacturing sector," he said.

However, building of houses needed to be cranked up by 45,000 a year to cover present demand, but this proposal is a step in the right direction, the HIA said.

Meanwhile, Masters Builders Association of WA director Gavan Forster said the government investment will not result in higher house prices.

"While this outcome [higher house prices] was possible when the market was at full capacity, the current subdued level of sales and highly competitive industry would mean that prices growth would remain low," Mr Forster said.

"By providing this major circuit breaker the Federal Government will arrest the current housing decline and restore confidence to homebuyers thinking about building a new home.

"One job created in housing creates another job elsewhere in the economy, so WA's current low unemployment level will continue as a result of today's announcement."

Today mortgage insurer PMI said Perth's median house price is expected to rise 12 per cent by 2010-11, although solid growth is unlikely over the next two years due to affordability constraints.

In its overview of the market, PMI Said that Perth's median house price fell 1.3 per cent in the last financial year to $446,000, with affordability issued to dampen growth to 3.1 per cent for fiscal 2009 and 2.2 per cent in 2009-10.

However, prices are expected to strengthen in 2010-11, with a forecast rise of 6.4 per cent to bring the median price to $500,000.

The $1.5 billion investment is one of five key measures announced today by Prime Minister Kevin Rudd as part of an overall $10.4 billion economic package.

Included is $4.8 billion for an immediate down payment on long term pension reform, $3.9 billion in support payments for low and middle income families and $187 milion to create 56,000 new training places in 2008-09.

The government will also accelerate the implementation of the government's three nation building funds and bring forward the commencement of investment in nation building projects to 2009.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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